Rise in early retirement threatens pension poverty as a time bomb


“permanently poorer”

It’s also bad for the finances of the over-50s, who are now missing out on higher income and savings for years to come.

Baroness Altmann, a former minister-turned-pensions campaigner, says ageism can make it harder for older workers to find new jobs, while retirement can come as a “shock” for those more used to the workday.

“I don’t think this is a step in a good direction for the long-term health of the economy and retirees. It’s a dangerous development,” she says.

She warns that early retirees could regret giving up income and old-age provision in the long term: “You have to keep looking ahead. They will be permanently poorer for the next 20 or 30 years of life.”

For those tempted to exit the labor market early, the road to retirement can be pitted with pitfalls. Even those with sizable pension pots risk running out of money decades before they die.

The average pension for someone nearing retirement is just over £91,000, according to the Investing and Saving Alliance. It can be unlocked from the age of 55.

However, pensioners saving £91,000 in their old age to take £15,000 a year would be out of money within 12 years, assuming their investments grow at 4 per cent a year.

In this scenario, a 67-year-old retiree would have already emptied his nest egg, barely keeping him past the legal retirement age of 66, according to analysis by stockbroker AJ Bell. However, postponing retirement by another decade would see the pensioner earn £15,000 by the age of 83.

Even a much bigger savings pot of £200,000 would only last 20 years if a 55-year-old takes out £15,000 a year. If they waited until the age of 65 instead, the pension would last until the age of 100.


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